Small Bizs On Hold Waiting For Aid

According to USA TODAY, Small businesses have put hiring, supply buying and real estate expansion on hold as they wait out the vote on a small-business-aid bill that stalled in the Senate earlier this summer.

The much-debated legislation offers tax breaks and waived loan fees. But it also comes with more divisive components, such as a $30 billion fund that would help community banks give loans to small businesses. Opponents say the fund would be a mini version of the often-criticized TARP large-bank bailout program.

Many small businesses had hoped the legislation would pass the Senate by the end of July. With two weeks left until Congress reconvenes, those firms are in a holding pattern.

What’s in the bill:

    – An increase on government guarantees to as much as 90% on some of the most popular loans. That would mean a little less pressure on banks if a company defaults, because the government would insure a larger percentage of the loan, says Bob Coleman, publisher of the Coleman Report. With current guarantees topping out at 75%, “there is a bit more exposure” for banks, he says.

    – Community banks with assets of $10 billion or less would be able to tap into the $30 billion fund when making small-business loans. About 8,000 banks would be eligible.

    – Small businesses would get about $18 billion in tax breaks, such as larger write-offs on capital equipment investments, and get credits for new hires.

    – The SBA would be able to increase the maximum for certain loans to $5 million from $2 million.

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